Donald Trump’s German car import tariff comment has wiped off £3.95bn in German car stocks.
The president-elect said he would levy a 35% import tax on German cars that come into America. Currently, most German cars are manufactured in Mexico and imported.
His words come from an interview with the Bild German newspaper published on Monday. He also levelled criticism at German car manufacturers for not building the cars on US soil.
He said, “If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA you will pay 35 per cent tax.
“I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that.”
Mr Trump added that German car makers would have to build cars in the US to avoid tariffs.
Following the comments shares in BMW, Volkswagen, and Daimler all fell dramatically on Monday. All three were trading at 2% lower on the pan – European auto industry index.
In response to Trump’s comments one Evercore ISI analyst wrote, “It is surprising that Trump singles out the car maker that exports more vehicles from the United States than any other manufacturer.”
All three car companies that have lost stock have built plants in Mexico with the idea of importing smaller vehicles into the United States.
Germany’s deputy chancellor and minister for economic affairs told Bild that “The American car industry will be worse, weaker and more expensive,” as American cars were dependent upon a transatlantic supply chain.”
The president of the German Association of the Automotive Industry, Matthias Wissmann, said that “in the long term, the United States would be shooting itself in the foot by imposing tariffs or other trade barriers”.
In the past, Trump has criticised General Motors and Toyota for moving plants out of the U.S and into Mexico.